Home Building Quality - NSW Legislation Changes and Implications For Owners

Home Building Legislation Amendments

- Customer: Dear Mr Builder, would it be possible to rectify the outstanding defects 1)..., 2)..., etc.?
- Builder: You have been pain in the backside. Stop whining. We bent over backwards to help with your problems! Don’t contact me anymore.

This is a type of conversation that happens from time to time when dealing with builders 2-3 years into the defect rectification process. Why it may take so long? Many factors affect the process.

This morning a couple of my friends have shared the article "Home Building Amendment Act: Sydney apartment owners say law changes are 'draconian'", knowing my interest in those matters. I indeed have some relevant experience.

The publication by Sydney Morning Herald above has got a couple of interesting items. First, it is vivid that comments to the post contradict whatever is said by Department of Fair Trading (authority) representative and chief executive from Urban Development Institute of Australia NSW. Second, it highlights the failing points of proposed changes to improve the situation in the area of home building quality in Australia (NSW specifically).

Examples:

• "Builders and traders face up to a year in prison for repeated unlicensed contracting work". That’s a good idea, however what if licensed builders and traders keep doing defective work? Who is going to implement this measure? At the moment builder has got a statutory duty to rectify defects – they don’t do this and the whole Fair Trading Department with their Tribunal is a joke, because:
a) Builders don’t care and the department is more of a recommendation to them rather than authority;
b) They delay the process as much as possible so the customers give up and fix the issues at their expense;
c) Also, how this monitoring is going to be implemented – extra money from the budget?

• "Minor work worth under $5000 can now be carried out without a licence". Beautiful! Now the builders would be able to use anybody to do the small jobs. I have once asked a guy who did the work in the bathroom about his qualification; he said he’s a carpenter! Nobody is checking this at the moment, because it’s almost impossible to do that. What’s the point of implementing another law which only a few would obey? The builder sends people who certify their own work on the spot – the certifier is not responsible. How the new legislation helps with this problem?
• One of the proposals is a 2% bond paid by developers to cover for defects that may arise when the building is complete. This would then make a situation with quality even worse – why the builder has to worry about it when the defects would be covered by the bond?

Quality Matters

The main concern here is quality of building work that’s being done and responsibility for the consequences of the wrong doing.

If the main idea of developers, builders and investors to earn more money (as of any other rational and logical actor on the market) then they would cut corners, use cheap materials and unqualified labour and would try to reduce costs.

Quality control which should be implemented by builders and developers is missing badly by the customers (final owners), but this issue does not seem to be present on the agenda.

In addition to that people speculating about market forces to be efficient, in the case of real estate face an opposite effect – in many cases developer and the builder have got good relationships with each other and in pursuit for profit do not worry much about quality of work, having knowledge about existing system that doesn't work well for home owners, keep involving the same builder in new projects even if the previous job was done with significant defects. Current supply is less than demand. New buildings are sold completely within several days off the plan! Majority of properties are bought as investments. Therefore there is no need by the business to adapt any quality control or even care about it, because the property will be sold anyway and the regulations seems to be a joke.

No matter what legislation is enacted – if it is not being enforced properly and does not give any more power to existing entities that are involved, i.e. Department of Fair Trading or Owners Corporations, or if the industry actors don't feel the need for quality outcomes – it is useless.

Make It Your Problem

Though builders and developers are responsible for the dodgy work that sometimes being done, the defects rectification process is a concern of property owners.

There are problems as well:

• In a situation when direct involvement of the owner or caretaker is required – they find excuses not to be involved. In my experience it is usual for 80-95% of units in a strata not to even bother turning up for inspections with the builder even if they have serious defects. This fact is used by the builders and they can either reschedule inspections or make several inspections so majority of victims just give up;
• Poor knowledge of the law and regulations. Majority of home owners in strata units don’t know who is responsible for what and it takes years for issues to be resolved just because of that;
• Assumption that somebody else will resolve their problems.

In order to improve the situation in general and in your case in particular (if you are in a situation when a job has been done poorly by the builder) – be involved in the problem!

• Don’t let the builder/developer go away without properly finishing their work
• Ask for another qualified opinion on how this particular job should be done
• Be prepared to spend time on this – it is your investment and will cost you much more in the future if the defects are not resolved in a timely manner
• Get the matter to court/tribunal if necessary without waiting too long
• Take control of the process: constantly contact the builder and relevant parties until the job is done and personally check the quality of work by being on-site when the job is finished or when it is being done

Happy home building and property investment!